Thank you very much for attending MINEBEA MITSUMI's business results meeting for the second quarter of fiscal year ending March 31st, 2020, despite your busy schedule. Let me introduce the presenters of our company. To your right, Representative Director, CEO, COO, Mr. Yoshihisa Kainuma. Senior Managing Executive Officer Katsuhiko Yoshida. I am serving as your emcee. I am from the IR division. Name is Yahiro. First, today, Mr. Yoshida will explain about the financial results. Next, Mr. Kainuma will talk about the business update and management strategy. After that, we will have a Q&A session. Today, we are planning to end by 7:00 P.M. In terms of the financial-related information, it is in your brief report and the financial supplemental materials. We have a press release that we announced today, the dividend surplus, interim surplus dividend. We have distributed that material. We have distributed questionnaires.
This will be a very precious feedback to our IR activity. Please answer the questionnaire, and after the meeting, please leave it on your desk. This meeting, including the Q&A session, is broadcast live on the internet and to be viewed afterwards on the website. It is recorded as well. Please understand that. Please refrain from taking photos or taking audio recordings outside of the related people of our company. Mr. Yoshida, please begin. My name is Yoshida. Today, I would like to explain the consolidated financial results for the second quarter of the fiscal year ending March 31st, 2020, and then Mr. Kainuma, Representative Director, CEO, and COO, will explain the highlights, including business updates. The consolidated sales for the second quarter of the fiscal year ending March 31st, 2023, was impacted strongly by the currency.
The sales was up 18.3% year-on-year and 36.7% quarter-on-quarter to a total of JPY 279.433 billion. As a quarter, the net sales hit a record high. Operating income was down 1.3% year-on-year and was up by 5.3 times than the previous quarter to total of JPY 19.372 billion. Profit to the period attributable to owners of the parent was down 12.9% year-on-year and up by 6.1 times than the previous quarter to total of JPY 13.916 billion. Currency fluctuations brought net sales down an estimated JPY 6.1 billion quarter-on-quarter and JPY 7.5 billion down year-on-year. It also brought operating income down JPY 1.8 billion quarter-on-quarter and JPY 3.0 billion year-on-year. Please go to the next slide. This is a quarterly trend in net sales, operating income, and operating margin.
The bar graph on the left is net sales, and the one on the right is operating income. The line chart is for the operating margin. The operating margin for the second quarter was 6.9%. That was down by 1.4 percentage points year-on-year, but up 5.1 percentage points quarter-on-quarter. However, expenses including business integration cost of U-Shin totaling approximately JPY 0.8 billion are accounted for as a special factor in the second quarter. The operating margin would have been 7.2% if these were excluded. Also, please note that the figures of the fiscal year ending March 2018 are based on JGAAP and provided for your reference so that you can look at past figures. The same applies hereinafter. Please go to the next slide.
This slide shows the difference between the initial forecast as of May and actual results for net sales and operating income by business segment for the second quarter. The machine components business segment saw lower than expected net sales primarily for ball bearings due to the macroeconomic slowdown. Sales for the Electronic Devices and Components business segment were also slower than projected, mainly for motors and sensing devices. The Mitsumi business' sales, on the other hand, were higher than projected, mainly due to increased shipment of mechanical components. The U-Shin business saw lower than expected sales due to a significant slowdown in production as a result of the slump in automobile market, especially in China.
Operating income for the Machined Components business segment fell short of the forecast as the recovery was slow for the demand for ball bearings used in fan motors, and this kept sales volumes down. Operating income for the Electronic Devices and Components business segments are about on target. The Mitsumi business enjoyed higher than expected operating income as a result of increased sales. The U-Shin business, on the other hand, saw lower than expected operating income due to a drop in sales. Please go to the next slide. Now let's take a look at the results by segment, starting with Machined Components business segment. On the left is a graph indicating quarterly net sales trends, and on the right is a graph with a bar chart, quarterly operating income trends, along with a line chart for operating margins.
Net sales for the second quarter decreased 2% from the previous quarter to a total of ¥45.1 billion. Ball bearing sales decreased 2% quarter on quarter to a total of ¥29.2 billion. External shipment of ball bearings totaled 185 million units per month on average. Despite the slower than expected recovery of demand for ball bearings used in fan motors, demand remained up in the automobile market. Sales of rod ends and fasteners totaling ¥9.6 billion were down 4% over the previous quarter. Business for the aircraft industry, especially small and medium-sized aircraft, remained steady. Sales of pivot assemblies increased 2% quarter on quarter to reach ¥6.4 billion. Pivot assemblies steadily contributed to our bottom line as we held on to an 80%+ market share. Operating income for the quarter totaled ¥10.2 billion, and operating margin was 22.6%.
While this represents a 0.6 percentage point decrease in the operating margin, operating income declined 5%. Looking at the results by product, we see that operating income for ball bearings, rod ends, fasteners, and pivot assemblies all fell slightly quarter on quarter. Let's look at the next slide. This is for the Electronic Devices and Components segment. Net sales increased 30% quarter on quarter to reach JPY 101.3 billion. By product, sales of motors were about the same as the last quarter at JPY 45.7 billion. Electronic devices sales increased by 2.1 times to a total of JPY 46.4 billion. This was primarily due to peaking demand for new LED backlights from our major customers. Sales of sensing devices were about the same as was last quarter at JPY 8.2 billion. The segment recorded an operating income of JPY 6.7 billion, and an operating margin of 6.6%.
By product, operating income for electronic devices in all the products rose quarter-on-quarter. Next slide, please. Let's look at the performance for the Mitsumi business segment. Net sales doubled from the previous quarter to a total of JPY 100.9 billion. Net sales increased for all products centering around mechanical components and optical devices. Operating income for the quarter totaled JPY 7.1 billion, and the operating margin was 7.1%. Next slide, please. Finally, let's look at the U-Shin business segment. Net sales decreased 7% from the previous quarter, including the pre-merger results, to total JPY 32.1 billion. This was due to a significant production decline as a result of a slowdown in the automobile markets, particularly in China, plus Europe and elsewhere. There was approximately JPY 0.4 billion one-time expenses in second quarter related to special factors such as business integration expenses and ramp-up expenses for new products.
One-time expenses for full year is expected to be approximately JPY 1 billion. Operating income for the quarter totaled JPY 0.5 billion, putting the operating margin at 1.6%. While this represents a 1.7 percentage point decrease in the operating margin, operating income declined 50%. Next slide, please. The bar graph here shows trends in profit attributable to owners of the parent. While the line graph charts changes in the profit for the period per share. The profit for the period was JPY 13.9 billion. Earnings per share was JPY 33.5. The next slide, please. This shows the quarterly inventory trend. At the end of the second quarter, inventories totaled JPY 181.4 billion, which is JPY 7 billion more than what it was three months ago. U-Shin inventory of JPY 15.9 billion was included because of the consolidation. Next slide, please.
This graph contains a bar chart showing trends in net interest-bearing debt, which is total interest-bearing debt minus cash and cash equivalents, and the line chart indicating free cash flows. At the end of the second quarter, net interest-bearing debt amounted to JPY 97.9 billion, which was up JPY 76.2 billion from the end of the previous fiscal year. Next slide, please.
This is a summary of the forecast for the fiscal year ending March 31st, 2020. While we expect sales to pick up for some products in the second half, global economic trends remain hard to pin down due to currency movements marred by the decline in automobile shipments and other factors on top of trade frictions that have cast clouds of uncertainty over our markets. As such, we have revised our second fiscal half and full year forecast. The exchange rate is assumed to be 108 JPY to $1. This slide shows the forecast by business segment. We made revision for each segment as well. This is the end of my presentation. Thank you very much. Mr. Kainuma, please. Let me give my presentation. I have a cold, so excuse me for sounding a bit disagreeable. Today's highlights.
As you see here, these are today's highlights for the automobile, construction equipment, home appliances, machine tools. These markets are not doing well. Smartphones and games has been supportive of our business, that has been our first half rough landscape. That said, excluding some industries, the trend of recovery, of course, for the semiconductor space, this has been already reported as recovering, I'm going to talk about it in details later. In terms of ball bearings, I think we have already hit the bottom. In terms of automotive-related companies, I think most of them has been suffering from low profits. U-Shin, unfortunately, I think the business has not been in line with the expectations. This is the thing that we will have to report to you. There, we have two plants in China.
We have Chinese automobile makers as the customers and U.S. automotive makers, and we supply handles, et cetera. As seen here, there has been a dramatic deceleration of the Chinese automotive market, and the utilization rate has gone down significantly, and that's the current situation. On top of that, the new products has been ramped up. This is in Europe, and I will touch upon that later in detail. That will be the next pillar of our business. There's a one-off expenses that we have to account for this ramp-up of the new product. U-Shin, for sure, will grow dramatically, and I am very confident of that. In terms of M&A, we have been conducting this. In terms of shareholder returns, as I will explain later, we will execute a shareholder's returns.
For this fiscal year, sales increased and the profit declined for this first half. JPY 1 trillion of front-loading this actualization of this a year ahead of schedule. We want to achieve this. The smartphone games has been better than expected. For this fiscal year, I think will drive our business. The first half operating profit up income, JPY 113.2 billion. The plan was JPY 12 billion. The difference of this JPY 4 billion was because of electric components, and MITSUMI was being able to generate more than effective profit. The U-Shin's one-off expenses, and Mr. Yoshida has explained about that. The automotive market has been stagnant, and ball bearings. We do have a large share in ball bearings. Excuse me. If the overall economy slows down, it means that the utilization rate will go down. The recovery has been slower than we have expected.
Going into the second half, I think basically we will be in line with their expectations. As I said, for the games, smartphones, showing strong trends, and I think this is completely different from last year. The last year, there was produced a lot, but we weren't able to sell what we had produced. Gradually, our products are selling, and that's the actual feedback that we have been getting. For ball bearings, the 5G IoT-related CapEx is becoming stronger and stronger. The inventory has been cleared out, and the China air conditioner inverter is utilizing inverters, and ball bearings will be sold into these type of air conditioning machines, and this is where we put our expectations. If you look at this chart.
This red line is year-over-year comparison. As you can see, it has gone down substantially. In the first quarter, it has hit the bottom, and on a single month basis, we have been able to recover to this level. January will be 200 million pieces. That's what we are hearing. This is completely different from January last year. For instance, if you look at the numbers, August last year for the ball bearing was 200 million. September, 230 million. October, 199 million. This year's external sales, August, 178 million. September, 193 million. October, 195 million. For October, there's only 4 million difference to August. It's gone down by 22 million. For our ball bearings, this is an indicator of the economy. It lags in terms of the drop, and it's a kind of a harbinger when it goes up.
When I entered this company, that was what I was told. In reality, if you look at the trend, basically it reflects that situation of the economy. I think basically this is a leading indicator of the recovery of the economic situation, if you look at our ball bearing shipments. The hard disk drives in 2025 maybe will go to 200 million units. In terms of the internal sales capacity, we can reallocate that to the external sales, so the margin improvement should be conducted. With the new plant construction may be delayed a bit under the circumstances. This is just for your reference. This is public information. The other industries' year-over-year trend, I have taken the semiconductors, OEM, ODM related numbers.
You can see that the ball bearings is showing the same trend, and basically all of these lines have hit the bottom. For the electronic devices and components, the LED backlights are doing well. The motors business is not doing that well. However, fans is going to recover. Going into the second half, we are looking to a recovery in this business segment. For the Mitsumi business, games are doing well. One thing I want to say is OIS, we have multi-camera, front cameras, will be auto-focus, large diameter lens, and our adoption new system. We have a trend that we have started to see emerge. In terms of optical devices, we said that we're not going to be that proactive in the spaces that we have declared as such. The backlight volume is going to gradually decline.
If you assume that is going to happen, it means that within our sub-core business, optical devices is one of the areas that we should be focusing on. One good news is that Mitsumi's analog semiconductors has become a good business. Last month, they have a JPY 400 million profit. That's the report that I have gotten. In that sense, they are the last of the Eight Spheres, but maybe they'll be able to increase their ranking among the Eight Spheres. For U-Shin. Today, specifically, in the showroom on the first floor, the smart lock demonstration is there. If you have time, please take a look at the smart locks of U-Shin. This CSD, flush handles, e-access products. These type of products, including home security locks, they will be electrification in this area. This is the most of the strength of MINEBEA MITSUMI.
By doing this business, the U-Shin business, I think it will become a good quality business. We are being engaged and doing in development and ramping up the production, et cetera, and we are supporting U-Shin in this manner. In terms of automotive, you can't simply change the process that easily, so it's taking a bit of time, and it's on about the market. The situation in this market has been directly hitting the U-Shin business. I think now is the time to look for the next opportunity and be unified. There are some new products, which are also displayed downstairs. I would like you to take a look at them if you have time. Dividend will be JPY 14 and JPY 67 billion. The JPY 14 dividend in the second half as well.
Our 20% dividend payout ratio, and usually we say it's between 17.5% and 22.5%.
This is within that range, and we would like to make hard efforts in order to achieve JPY 67 billion. The share buyback, we have, again, the authorization for one year, and it's not that we have no intention of doing this. However, it is also true that we are faced with various restrictions which enable us to do this. When those restrictions go away, we would definitely like to buy back our shares as a part of our efforts to improve shareholders' return. I have given you a brief overview about our strategy. Thank you for listening. Next, we would like to have Q&A session. We would like to accept the questions only from institutional investors and analysts. Before asking a question, please mention your affiliation, name and affiliation. Please wait until a microphone is handed to you.
The second person from the left in the front row. Takayama from Goldman Sachs. Thank you for this opportunity. The first one is about the ball bearings production volume, second, third, and fourth quarter. The new forecast and the server related and automobiles related are recovering, what seems to be the strongest, the order of strength, I would like to know. The mechanical components profit margin, 27%. This is probably the highest, but sales are not expected to rise sharply. Why is profit margin is likely to go up by this much? That is my question. First of all, the ball bearings production volume, Q2 actual, in average, 244 million units. In Q3, 256 million, Q4, 259 million. These are the assumptions. By application, automobile, very strong, as Kainuma explained to you previously.
This year, it has renewed a record high number, a stronger trend is likely to stay going forward. Home appliances and the like have recovered from the slump. Basically, there are no negatives year-over-year, but the only weakness is the fan motors. In June, it hit the bottom. June, July, and August, the numbers were weak, but that is recovering, boosting overall numbers. The profit margin. This year, we are determined to achieve JPY 1 trillion, and we have set the sales targets based upon that plan, and there are some ups and downs. In terms of the numbers, it may seem odd slightly, but looking at the ball bearings, sales are expected to grow going forward. If I may add, the ball bearings, towards Q4, it will be stronger than the plan.
We have received an indication that seems stronger than the plan. The machines for increasing capacity, we will try to suppress the burden in order to improve profit margin. Taking all those into account, probably this type of number is achievable. The product mix, is it like product mix is going to improve going forward in the second half? The automobiles, last month, it made a record high number. In this kind of situation, we are very grateful to achieve that record high number. Compared with fan motor, the mix is much better, and current trend is likely to continue for some time. My second question is Mitsumi business. Operating profit, full year forecast has been revised up. Is it games or China or the North America? What is the reason behind that?
What is driving the growth is the games, OIS was reported in the newspaper today. Chinese players seem very strong, and American players are slowing down, and Chinese players are emerging. That trend is even stronger this year, and we are pleased to see it. Games, I think you are more knowledgeable, but game business is very solid. Those are the growth drivers in our view.
Lastly, my question is about U-Shin. These five pillars that you refer to, at next fiscal year, what type of sales level can we expect for these five pillars? In terms of the profit improvement measures, the business environment has changed. Are there some additional measures that you are implementing? What are your current activities?
In terms of the orders we have already received within the five pillars, the CSD flush handles. From next year, we are going to see expanded sales of these products. In terms of the production know-how, we are trying to make this integral to our production. Home security locks, I think for next fiscal year, I want to come out with home security locks into the market. In terms of the detailed figures, in May next year, let us announce that.
For example, in terms of margin, U-Shin, from your perspective, next fiscal year, how much should this be? What do you currently think?
JPY 10 billion will be the target for U-Shin. JPY 8 billion is the forecast. Maybe we are short of this target. If you look at the situation, I think the automotive industry, depending on the OEM, is very different. The strong ones are very strong, but the European OEMs and the U.S. and Chinese local players, they're not doing well. I think that's the current situation. We have plants all over the world and doing business with all of the players. The macroeconomic situation or the automotive industry, I think we have to observe what's happening in these markets. The CSD flush handles, et cetera, for these type of products, and to an e-axis products, we are focusing on high-end cars. U-Shin currently, basically these are key locks, these will be steering locks. These are mechanical products.
They are targeting or providing products to low-end cars. To be able to improve their margin, we have to change the product mix. This is not an excuse, but for the automotive market, you have to go through various procedures. The model changes once in every four years, that's the cycle in an automotive market. It's not a thing that you can snap your fingers and do tomorrow, but once we are taken up as a product, we can continue the business. I think the home security lock, the fifth pillar, I think that's the low-hanging fruit. I think basically what you're seeing from the business of ball bearings and what you're seeing from U-Shin is completely different. Because U-Shin is just doing business with limited OEMs, but for the ball bearings, I think it's across the board.
In terms of basically a good reflection of the economic situation, that's ball bearings. I think even if you're going to see a recovery, the machine tools is horrible. I think it's different depending on the industry. The semiconductors are recovering. The recovery is different by the industry. Even if there is a recovery, depending on the strength of the manufacturers, we will be influenced somewhat. I think as the components manufacturer, that's unavoidable. Thank you very much.
The person in the front row.
Morgan Stanley MUFG Securities . My name is Sato. Thank you very much. I have three questions. The first one is somewhat related to the previous question. The ball bearing Q2, 185 million units was the external sales number. Could you give me the monthly numbers, external and internal sales? Q2? External sales, 183, 179, 194, and internal sales from July, 64, 66, 63. The unit is a million units. What about the production? 253, 235, 245. Thank you very much. These seem that they have recovered pretty well. What is the outlook, or to what extent did it recover in October? October external sales, as I said previously, 195 million units, and internal sales was 65 million units, so our total is 260, and the production has been increased to 254.
Earlier I talked a little bit about the production, and with that as the bottom, actual operation is likely to exceed that level. Thank you. My second question is, from Q1 to Q2, Backlight and Mitsumi's game, OIS are increasing. From Q2 to Q3 or to Q4, how do you think these three businesses will change? Can I give you sales numbers? Electronic devices, Q2 sales, JPY 46.374 billion, Q3, JPY 52 billion, JPY 46.7 billion is the Q4 number. The second half, JPY 98.9 billion, Mitsumi Q2, JPY 100.9 billion and JPY 82.4 billion, the Q4, JPY 52 billion. The games, Q2 was the peak and Q3 is likely to slow down a little bit. Customers are selling very well, so there may be some upside. Optical devices, OIS.
The Q3 is likely to be far better than Q2 and towards Q4, it will go down again a little bit. That is our view. The Electronic Devices peaked in Q3. Is that because Backlights will increase in Q3? Am I right in assuming that? Yes. Backlight sales will continue to be robust, Q2 versus Q3. Thank you. About the U-Shin. After the integration, it's been more than a half year since the integration. I think you have tackled with various production reforms, particularly European operation. What is the picture, and what kinds of changes can we expect towards the next fiscal year? If you can talk about that. Europe will be the biggest key factor for U-Shin's turnaround. In the past six months, I visited Europe three times. Once every two months, our management visits Europe.
We have organized a huge support team and centering around new products, we are implementing improvements. The vertical integration is going on, and the parts and components, we are supporting production of the parts and the components for vertical integration. In addition to that, a joint sourcing with MINEBEA MITSUMI, purchasing and integrating logistics is another thing we are working on. Next year, there will be many new products launched into the market. By accumulating ability, we shall be able to have smooth launches, and that will change the tide and U-Shin's business will start to improve. People are motivated. The employees are more serious and diligent than I thought. Organizing good teams, we would like to solve each and every problem.
Automobile market in Europe, there are positives and negatives, and there may not be sufficient sales, so we need to keep paying due attention to that. Let's go to the next question. Please raise your hand if you have a question. On the left, second row from the front. Akizuki from Nomura Securities. There are two brief questions I want to ask. The previous question said that electronic device for the third quarter and fourth quarter, the sales will just go down modestly. I think that is your assumption. Normally, the fourth quarter, basically, it's a quarter that the sales drops a lot. Why are you assuming a moderate decline of sales? That's my first question.
It's very difficult to say, but they are new products. The introduction cycle, that's different from previous years. Normally, to the second quarter to third quarter, we will produce, and then the fourth quarter, you will see a decline of sales. This product has a different cycle than the normal cycle. That means the fourth quarter, we'll see some level of sales coming up because of this new product. Understood. For the Electronic Devices and Components, the Mitsumi business, there are some units that went into electronic devices. For the full year, how much will this sales generate? It's about JPY 15 billion is related to this specific business unit, and JPY 10 billion is working for Mitsumi. The new business is about JPY 1.15 billion. Confirmation about figures. In terms of the corporate expenses with the full-year expectations, JPY 3 billion.
This has increased by JPY 3 billion from the beginning of the fiscal year. Can you go into giving the breakdown? The next year onwards, well, maybe it's JPY 3.5 billion by quarter, I think. Once this runway in the past, are you going back to this runway from next fiscal year onwards? Would you please give me that number? The first quarter, in the first quarter, well, when we gave a presentation, I think I referred to that for this fiscal year, we extended the retirement age to 65 years old. With this, the retirement, we have increased some provisions for the retirement benefits shortfall because of this. M&A, we have been very active on the M&A front, so expenses and costs related to M&A have been coming up. That is the major reasons.
For the M&A cost, if this has not gone up, about JPY 15 billion, I think, basically, would be the corporate cost. Understood. Thank you very much. Any other questions? The second row and the second person from the left. Thank you. Watanabe from SMBC Nikko Securities. I have two questions. One is about OIS. You said that you'll be more proactive in OIS, but in terms of investment, what is your stance? Cebu capacity expansion, or are you going to expand the scale of the plant, or are you going to utilize Cambodia plant? Is this focus going to entail any CapEx? Basically, we are not thinking about expanding our capacity at Cebu. If the volume goes up, this will be absorbed in Cambodia.
In terms of CapEx, we are conducting CapEx, but we are not in the phase that we need huge CapEx. There will be numerous business opportunities, but if that comes up, we will reallocate existing capacity or rearrange the existing capacity. We will not invest hugely in CapEx, and I think basically we'll be able to cope with that level. The Chinese OIS will be concentrated in Cambodia, and the Philippines will be basically focusing on their biggest customer. We will rearrange this capacity so that we can enhance our overall capacity. I think that's the way to look at it. This still will be your subcore business. Understood. Thank you very much. My second question is about, well, I want to ask about U-Shin. U-Shin, originally, they have been doing their business, and after the acquisitions, I think their business has changed.
I think, was Europe the major reason of the acceleration? Where U-Shin has been conventionally generating profit, was that impacted? It's both, actually. The U-Shin, that's the European business. Well, the former U-Shin Group, excluding Europe, that has been profitable. The Europe group, basically speaking, there are two businesses. Both have been impacted by the automotive market slowdown, and their profitability is declining for both parts of their business. I cannot go into detail, but I think more or less you have assumptions about the customers. If you look at those customers. Doors have flush handles, and they are correlated to that decline of the sales of the cars. The handle sales will go down as well. You can't change the 4M, but it's difficult to assume that the automobile business is going to come back strongly in the next fiscal year.
Besides new products, are there any other measures that you can come out with? My policy is that so home security locks.
New products should be produced at various sites and then sold in various markets. I think being on the offensive is the best defense. That's my policy. In terms of automotive market, there's a very clear demarcation between what we can do and what we can't do. We can't just stand by on the sidelines and expect something to happen that we can't control. In terms of what matches our characteristic is the Home Security Lock. I think this is a good match with our business policy, so I'm trying to focus on that. Thank you. Thank you very much. Any other questions? The second person from the far left line. Mitsubishi UFJ Morgan Stanley Securities, Uchino is my name. Thank you very much. I have two questions. The first one is about Backlight.
You talked about the seasonality earlier, and there will not be a huge decline from Q3 to Q4. As for the future direction, the seasonality could be mitigated next year onwards. Is that right? Backlight demand forecast for the next fiscal year. As Yoshida explained earlier, well, it's rather hard to say, but this year, as one factor, the sales. We have this planned sales, and that is the reason why it's a sort of mild curve, and smartphones probably applies to the overall situation. That is my answer to your first question. About the next fiscal year, as I usually say, backlight, I have never heard from our customers that the backlights will diminish or cease to exist. That is what I can say. When it is to disappear, then I will say so.
Today, there is no indication that it is going to disappear, and that is as much as what I can say at this point in time. I hope it's all right. It is all right. My second question is, Mitsumi's machined components, particularly for game consoles, the demand in the first half, or the production, was quite solid. Probably it was impacted by trade friction in the second half. Is there any risk for slowing down? With regards to this business, there is no signs of slowing down. Rather, it will be very strong. I cannot give you more details, but if you speak to our customers or the companies that you think are our customers, I think you can understand the situation. If you have a question, please raise your hand. On the very front row, please.
Thank you for your presentation. Goto from Mizuho Securities. I have one question. MITSUMI's midterm direction. Basically trying to flesh up the current business. The actuators, I think you have mentioned that. In games, I think basically you said it was robust, but I think some change will come in the future. As a next driver, what are the businesses are trying to develop? What are the conditions or what is the progress about the next driver for MITSUMI?
In the conventional segmentations, Mitsumi is game, OIS, and others. Others are not that good. I think that's what you think. Semiconductors is one area that we want to put a lot of focus on. Because when we acquired Mitsumi, I thought that the semiconductor business is the first that we're going to sell. Conversely, semiconductors is showing a very good trend. They are basically the core of generating profit. We want to develop the semiconductor business. If you look at the conventional segmentations, maybe this will lead to misunderstanding, because on the first floor, we have these IoT displays or exhibitions, and I think you'll understand, the home security locks, et cetera. All of these businesses are backed up by Mitsumi. It's not Minebea. It's Mitsumi's staff or business that's backing up these new businesses.
U-Shin cannot do these type of businesses alone. I think basically we have to change the segmentations in the future.
Rather than looking at this commercial segmentation, this synergy that we are focusing on, this combined strength is what we are putting priority on. If these things come out in the market, we have to show that these things will sell, we do understand that we have to prove ourselves. We will strive to show you that evidence as early as possible. Various measures, initiatives are in place, actually, but maybe not enough to make you believe. Next fiscal year, I hope that we'll be able to show you the evidence of our efforts. Thank you. Any other questions, please raise your hand. Questions? If you have questions, please raise your hand. Again, please. This is my second time to ask. For the ball bearings business, there are two questions I have.
One is that for the fan motors, the recovery of the fan motors demand. The last year, the level was low, so year over year it's better. Is it going to recover to the past peak, or is it just you're clearing those low hurdles? I want to know about that. Another is for the automotive business, so fuel efficiency, et cetera, and I think basically it's better than the automobile output, but the automobile output itself is going down. Is this special factors are there? Actually basically recovering despite the fact that automobile output is declining? Could you elaborate on that? The fan motors recovery. We have 5G, IoT, as you all know, will certainly become the driver. These fan motors, as long as the inventory is cleared out, the demand will come back. How far will this recovery be?
I think it depends on how the market behaves. What we can say at this point is that we have hit the bottom and seeing a sharp recovery. That's the length that we can say. In terms of how this chart, the recovery is going to look like, maybe next year, in two years after, maybe in retrospect, we may be able to say, "Oh, this was a V-shaped recovery." That is what we are assuming based on past experiences. I think basically we are assuming and reading in a lot. For the automotive industry, the electrification is going to go forward. This was a thing that will happen. Meaning that the motors, or ball bearings, motors and ball bearings that we use in motors will have to prove that it will work from 230 degrees to 120 degrees. There's limited companies.
Well, Chinese companies cannot supply these type of ball bearings that have this level of heat resistance. I think that means we have an advantage. This trend. As is EV, then this trend will accelerate. We have this kind of negatives and positives into some automotive market. Even so, the ball bearings usage, available bearings in the automotive is increasing, and I think this is remarkable. A lot of different type of automobiles is going to be EV or become hybrid vehicles. Means that, for instance, the air resistance controlled brakes, et cetera, will use ball bearings. We will establish a business, and then that will change our margin outlook. We want to be engaged in this business. Thank you very much. Next question.
Second row from the right-hand side and fourth line. Hirata, UBS Securities. Thank you for your explanation. I have questions about the backlight. From Q2 to Q3, sales are likely to increase, and from Q3 to Q4, growth will be modest, you said. The Mitsumi gains, there seems to be an upside in Q2, Q3, and Q4, do you feel there is an upside, and did you put together conservative numbers? What is your feeling? You also said that the backlights will not disappear next year. Is it going up or remains the same? Qualitative information I would like to get, if possible.
This industry, as you know, it's very difficult to predict. Taking into account the various pieces of information, we think that things will be quite solid going forward. The various changes the customers and customers related information suggest. I think there is a possibility for an upside.
That is about Q2, three, and four. Next year onwards, as Kainuma said earlier, what Kainuma said is as much information as we can give at this point in time. If there are any backlight business opportunities, we will capture them. My second question is, earlier you said that you will keep looking for M&A opportunities. Mr. Kainuma, what is the thing you want the most right now? You have both various businesses, and what is lacking in your view? Areas or technologies? To be quite frank, there are two things. One is this U.S.-China trade friction. The performance of the companies have deteriorated, and therefore, we stopped or suspended the business. In terms of the area, it's rather difficult to say.
Later on, I think you will be convinced, or that is the type of the area we are aiming at, where we can exert our comprehensive capabilities. Using, I think you will see if you look at downstairs, at MINEBEA MITSUMI's products. The using products that we are working on shall be quite persuasive as MINEBEA MITSUMI products. Backlight, we had a dependency on backlights. This year we were helped by backlights, but probably this year will be the last year of such kinds. Eight Spheres without depending on a backlight, and comprehensive products we would like to launch into the market. That is the same strategy we have been working on in the past several years.
Thank you. Any other questions? If not, we would like to end the meeting.